THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LARRY KING, HOST: Tonight, Michael Moore. He says we got mugged by Goldman Sachs. And today, Congress rips into that firm, accused of ripping you off.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You knew it was a (EXPLETIVE LANGUAGE) deal.

(END VIDEO CLIP)

KING: Plus, Moore's take on Arizona's controversial immigration law and Sarah Palin and the American auto industry's comeback. Michael Moore -- his opinions for the hour.

Next on LARRY KING LIVE.

Like him or dislike him, he's never dull.

We welcome Michael Moore.

MICHAEL MOORE, FILMMAKER: Try to like him if you can, please.

KING: Try to like him.

We welcome Michael Moore back to LARRY KING LIVE, the Oscar- winning documentary filmmaker, best-selling author. His most recent film "Capitalism: A Love Story".

Kind of prophetic today.

We're going to talk about Goldman Sachs. And I think he's going to take them to task. The firm's executives, past and present, were on the hot seat on Capitol Hill today. Hearings just ended. Members of the permanent Senate Subcommittee on Investigations accused them of unbridled greed in helping push the U.S. economy into a tailspin. The final witness, Goldman chairman and CEO O. Lloyd Blankfein, finished testifying a couple minutes ago.

Here's some of the grilling.

(BEGIN VIDEO CLIP)

SEN. CARL LEVIN (D-MI), CHAIRMAN, SUBCOMMITTEE ON INVESTIGATIONS: They are not told that not only are you not a fiduciary, you are betting against the very security that you're selling to them. You don't disclose that. That's worse... (CROSSTALK)

LEVIN: That's worse than not being a fiduciary.

UNIDENTIFIED MALE: Senator...

LEVIN: That's being in a conflict...

UNIDENTIFIED MALE: We don't...

LEVIN: -- of interest situation.

UNIDENTIFIED MALE: We don't -- I don't think our clients care or they should care what our interests are...

LEVIN: That you were betting against the security you're selling to them?

They don't care?

UNIDENTIFIED MALE: You say betting against.

LEVIN: Yes. You're betting. You're going short against the very security. You're holding a short position against the very security. I read you over and over and over again. You're selling securities, many of which are described as crap by your own sales force internally.

(END VIDEO CLIP)

KING: Michael Moore is with us.

You watched the hearings.

What struck you the most?

MOORE: That was my -- that's my senator from Michigan.

KING: All right.

MOORE: We're -- we're a rough bunch.

What struck me the most is that the -- these Goldman guys, all day long, sat there hemming and hawing and -- and essentially played the American people for chumps. That's what it felt like to me. Because even when presented with the actual evidence that -- that -- with their own e-mails where they were yucking it up about how they're taking people's pension funds, they're taking people's 401(k)s and investing it in something that they know is a bad investment and then they're going to go and take a bet out hoping that that investment fails so that they get money from that...

KING: But the part that doesn't make sense...

MOORE: Yes?

KING: Let me tell you -- talk...

MOORE: Yes.

KING: -- from a horse player's standpoint.

MOORE: Yes?

KING: If I'm a tout and I give you a horse that I don't like while I bet a horse that I think is going to win, I win this race, but I lose you as a customer.

Isn't that dumb?

MOORE: Are you trying to tell me something, Larry?

I didn't understand the horse...

KING: No, no, why would you...

MOORE: -- the horse. What are...

KING: Why would you bet against -- why would you bet against -- why would you advise someone...

MOORE: Oh, OK.

KING: -- and then go against them and expect to keep them as -- as clients?

MOORE: Because this has all -- this has been going on for about 30 years and it's all about short-term profits, short-term gain. There's no -- there's no real thinking about...

KING: But what happens to the people who lost in the short?

MOORE: Well, because then there's another schmuck around the corner, some other sucker that's going to come in there and -- and invest, because you're Goldman Sachs, because you're the gold standard of how this works. I mean that's -- that's -- that's not unusual.

Why are those guys still down in Times Square doing the three card monte?

I mean don't we know by now that that doesn't work?

There's going to be another tourist come up there and put their 10 dollars down.

KING: Let's play dumb.

What's a derivative?

MOORE: A derivative is something that is -- is basically, it's taken -- it's -- it's -- it's essentially the bet that you take from something that's real so for instance -- and of course now I'm -- I'm going to explain something that I -- it was a big joke in my film because...

KING: I know.

MOORE: -- it's almost an impossible thing to explain. But basically...

KING: Simply put.

MOORE: Simply put, let's say I'll -- let's say I need a thousand barrels of oil for the coming year for my business and I'm going to invest in this oil. But I also am going to -- I want to make sure -- I want to hedge my bet, too, just in case the price of oil goes up. So I take out what you would call a derivative to make sure that I get to...

KING: You're hedging your bet.

MOORE: Right. It's essentially you're hedging your bet...

KING: That's legal, isn't it?

MOORE: -- so that my (INAUDIBLE).

KING: That's legal. It's done all the time.

MOORE: Yes. That's correct. It is legal.

KING: So what did Goldman Sachs do that you think -- and they have just been accused. This is a civil suit.

What did they do wrong...

MOORE: Because it's illegal...

KING: -- in your opinion?

MOORE: Because it's illegal to commit fraud.

KING: What was the fraud?

MOORE: The fraud was not telling the person who is investing in this -- Timberwolf was one of the examples they gave of an investment the -- one of assets that they were getting people to invest in.

If you don't tell the person that this is what they called a -- I won't use the word, but a crappy investment -- that's what -- that's their words in their own e-mails to each other, you're defrauding the person who is taking that money and giving it to you, because they're giving it to you because they're hoping you're going to do something good with it. And you -- and when you make the investment, you realize it doesn't always go well.

KING: Were these mostly mortgages?

MOORE: No, no. Not all of them. No. No. They were -- you -- you could do a derivative on just about anything. You know, they -- they're -- in some markets around the world, they could -- they do derivatives on or place bets on who's going to win the World Series or who's going to win an election.

KING: But they knew there were bad loans here, right?

MOORE: What's that?

KING: They knew there were bad loans?

MOORE: Yes, they knew they were bad loans and that's where the fraud...

KING: That's the accusation?

MOORE: And that's where the crime is.

KING: Subcommittee members from both sides of the aisle were pretty much on the same page in their characterizations of Goldman's activities.

Take a look.

(BEGIN VIDEO CLIP)

SEN. CLAIRE MCCASKILL (D), MISSOURI: You are the bookie. You are the house. You have less oversight and less regulation as you all began this wild, wild west of tranches, waterfalls, equity tranches, residual, warehousing. As you began all that, you had less oversight than a pit boss in Las Vegas.

SEN. JOHN ENSIGN (R), NEVADA: I think most people in Las Vegas would take offense at having Wall Street compared to Las Vegas, because in Las Vegas, actually, people know that the odds are against them. They play anyway. On Wall Street, they manipulate the odds while you're playing the game.

(END VIDEO CLIP)

MOORE: And...

KING: Is this going to change?

MOORE: And -- can I add to that?

And we now guarantee your losses. So in other words, if you lose, we, the American people, will bail you out.

KING: Is this going to change things, these hearings?

Do you expect...

MOORE: I don't -- I don't think that these hearings are -- especially the Dodd bill -- I mean Mr. Blankfein, by the end of his testimony, said that he -- he thought, generally, the Dodd bill was a good bill.

Well, that should kill the bill right there, if he thinks that's a...

KING: Let me get a break.

MOORE: -- if he thinks that's a good bill.

KING: Which reforms would Michael Moore implement on Wall Street?

What would he do right now?

We'll ask him, when we come back.

(COMMERCIAL BREAK)

KING: OK. Against this backdrop, the Senate Republicans blocked action on financial reform legislation for the second day in a row. The vote was 57-41. They were three votes short.

So the question is, what would you enact?

President Moore -- no, King Moore, what's your reading?

MOORE: Well, King Moore would mean that you and I have a special relationship but...

KING: No, but what would you do?

(LAUGHTER)

MOORE: The...

KING: Let's let that slide.

MOORE: OK. Well, what I would do is, first of all, in order to prevent the next crash, we have to take care of too big to fail. We have -- we have these banks that are too big. They have to be broken up.

So there's -- there's a bill that's being proposed by Senator Sherrod Brown from Ohio and Ted Kaufman from Delaware. And it's called The Safe Banking Act of 2010. And this is the bill everybody watching should get behind, call their member of Congress to support the Brown-Kaufman Safe Banking Act.

KING: What's -- in effect, what's in it?

MOORE: What this will do is it -- it will put a cap on the size of these financial institutions. And it will essentially allow for them to be broken up. So instead of these six large banks, you could have 20 or 30 or 40 different financial institutions.

KING: And how would that help things?

MOORE: Well, because then -- then nobody is too big to fail. That's an -- I mean that's -- that was the -- that's one of the problems that caused the crash. I mean, it's essentially -- you know, they were talking about the FDIC today. When a -- when a community bank, a smaller bank, fails, the FDIC comes in and in addition to protecting everybody's money in there, they -- they figure out what parts of the bank are making money, what parts aren't and they sell off different parts of the bank's assets...

KING: Right.

MOORE: -- to other banks or individuals or institutions or whatever. And -- and so, I mean I think that's -- but -- but, for me, this is like getting into the weeds a bit, because I think that there's a larger problem here...

KING: Which is?

MOORE: -- which is the economic system that is still rigged to benefit the few at the top while everyone else struggles to make it from paycheck to paycheck. That's if they have a job. And where I come from in Michigan, we've got...

KING: Are you a socialist?

MOORE: Oh, no. I'm an American, I think.

KING: Favoring what political system?

MOORE: Favoring the democratic set -- that's what I mean. I'm an American. I favor democracy.

KING: Well, the democracy says I can rise to the top and I can make more money than you.

MOORE: No. Well, to me, a democracy means that everybody has a seat at the table. And the rich man at the table doesn't take nine slices of the pie and leave one slice for the other nine people at the table. Democracy means everybody has a piece of that pie.

KING: Are you saying the Goldman Sachses are bad for the economy?

MOORE: Yes.

KING: As entities?

MOORE: And not just them. I mean anything that's -- that says -- we can never find ourselves in the situation again where an institution says if we fail, our entire economy is going to collapse.

KING: As General Motors goes, so goes the country?

MOORE: That has to stop, because -- because that puts all of us at risk. And -- and a lot of people -- a lot of everyday people and their pension funds lost a lot of money.

KING: All right. The SEC has filed suit against Goldman Sachs, accusing the firm of defrauding customers in connection with the sale of a complex mortgage investment. That's what I meant by mortgages. Named in that suit is trader Fabrice Tourre, now on paid leave from Goldman.

Tourre defended himself vigorously in today's Senate testimony.

Watch.

(BEGIN VIDEO CLIP)

FABRICE TOURRE, GOLDMAN SACHS: Mr. Chairman, as you know, the Securities and Exchange Commission recently filed a civil suit alleging that I failed to disclose to investors certain material information regarding a transaction that I helped to structure named Abacus '07 81. I deny categorically the SEC's allegations and I will defend myself in court against this false claim.

(END VIDEO CLIP)

KING: Well, what's your read on him?

MOORE: Well, I mean, going after a guy named Fabrice, I mean come on.

(LAUGHTER)

MOORE: You know, it's just like in junior high. I mean, essentially they've singled out the Frenchman. They've singled out him as -- as the scapegoat for all of this. There's a lot of -- a lot of fingers that were in that pie...

KING: Help me.

MOORE: How about...

KING: Were they investing in mortgages that they knew that people weren't going to make the payments on the mortgage?

MOORE: Well...

KING: And they asked investors to invest with them...

MOORE: Yes. And...

KING: -- even though they knew that (INAUDIBLE)?

MOORE: And -- and as time went on, as they saw, in '06 and '07, that things were getting pretty shaky, they started doing much more betting against these mortgage investments.

KING: All this is alleged.

They're denying a lot of this, right?

MOORE: Well, I think they've -- they've denied everything or sort of denied it today in front of the -- of the committee. But I think it's -- look, it's not just this one guy. It's not just Goldman Sachs. There's -- there's a lot of people and a lot of companies at fault here. And I think just to make one guy the scapegoat, I don't think that's really the right thing to do.

KING: OK.

We're back with more of Michael Moore.

Tomorrow night, we might have another opinion from Donald Trump.

Don't go away.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MICHAEL SWENSON, MANAGING DIRECTOR, STRUCTURED PRODUCTS GROUP TRADING, GOLDMAN SACHS: I wish we could have done better in hindsight. But at the times that we made the decisions, I didn't think we did anything wrong.

(END VIDEO CLIP)

KING: We're back with Michael Moore.

Congresswoman Mary -- Marcy Kaptur of Ohio and a number of other House Democrats are calling for a criminal investigation of Goldman Sachs.

Would you go that far?

MOORE: Absolutely.

KING: Why?

MOORE: All right. I think -- I think -- I mean I'm -- I'm happy the Obama administration brought these civil charges against them. But I think there should be a criminal investigation. A lot of people's money vaporized. And -- and I think when you -- when that happens, I'll tell you, we spend a lot of energy in our criminal justice system going after people that stick you up for $100. I think the American people got stuck up for a hell of a lot more than that.

MOORE: They were his number one private contributor, almost a million dollars.

KING: So did this take some chutzpah on his part?

MOORE: Yes. I think so. Yes. And...

KING: He had to sign off, I assume?

MOORE: Yes. But of course -- but it's like -- it's like a lot of things with the administration, you know, their heart is in the right place and they go about, you know, 60 percent of the way. But they don't take that other 40 percent, which, in this case, would be a criminal investigation, also, of Goldman Sachs.

KING: Goldman Sachs is one of the targets in your documentary "Capitalism: A Love Story".

UNIDENTIFIED FEMALE: The Treasury Department -- it's basically an arm of Wall Street. All the people in charge were from Goldman Sachs.

UNIDENTIFIED MALE: We call it Government Goldman in the modern era.

MOORE: That's because there are now numerous former Goldman executives inside the Bush Treasury Department, as there were under Clinton. They worked as powerful lobbyists from the inside to abolish financial regulations while we paid their salaries.

(END VIDEO CLIP)

KING: Do you hate Wall Street?

MOORE: I hate the fact that a company like Goldman Sachs can essentially run our government. The former CEO of Goldman Sachs becomes Clinton's secretary of the Treasury. A former CEO of Goldman Sachs -- a different man -- becomes the Treasury secretary under George W. Bush. Bush had about 12 Goldman executives. Obama has three of them. Timothy Geithner's chief assistant is a former Goldman guy, as is the undersecretary of state for economic affairs.

It's -- it's -- there's a revolving door, as Senator Levin said, the lobbyists are out in the hallway right now. They're spending tens of millions of dollars to stop this banking legislation.

KING: How do you react, Michael, when people say this is a system, though, that did pretty good by you?

MOORE: Well, I -- I don't own a single share of stock. And I never have. So I don't...

KING: But you've made money...

MOORE: -- that's not a system that...

KING: -- in a comfortable system, right?

MOORE: No, I've made -- I've made money because I -- I worked and I had a few ideas and I made films about them. And -- and I -- and I've done well, as -- as I would do under a system that was more democratically organized so that not so many people had to suffer so that others could do so well.

KING: Are we down to one word here -- greed? MOORE: That's what it is. It is greed. And capitalism has become organized greed. I think Adam Smith and the people who originated capitalism would -- would be very upset at what it has become. And it's become a cover to protect that upper 1 percent that now has more financial wealth than the bottom 95 percent in our society.

KING: Arizona's new immigration law -- we can't wait to talk to Michael about it.

And we will, next.

(COMMERCIAL BREAK)

KING: A sudden thought. A lot of people may be thinking they're seeing Michael for the first time, since he is without a baseball cap. This is historic for you.

MOORE: I think I might have come on here once before. Well, I mean I...

KING: I don't remember that.

MOORE: Really?

Well, I just -- I woke up one morning and I just realized I had hair. I mean, you wear those things when you don't have hair.

MOORE: Good. I don't understand Arizona. I mean I -- I -- I didn't think it would be possible for them to embarrass themselves more than they did 20 or so years ago when they were the only state that wouldn't have Martin Luther King Day. This law of theirs, it's -- I don't know what to say. It's kind of like if -- I don't know if you've read the language. My position usually is, is any time something sounds like dialogue from "Hogan's Heroes," it shouldn't become law. I mean this is really...

(LAUGHTER)

MOORE: I mean it's -- it -- that they could just go up to anybody who looks Hispanic in a state that's one third Hispanic and demand papers from them, this is not the American way. And I can't believe it will hold up constitutionally. KING: Do you think they -- they -- do you agree that they have a problem?

MOORE: Well...

KING: That they're trying to deal with a problem?

You don't think they're a fascist state, do you?

MOORE: I don't -- well, I don't know.

What is the problem, really?

I mean most of these immigrants who come here work very hard. They don't...

KING: They should come legally (INAUDIBLE).

MOORE: And they -- no, even the illegal immigrants, they work very hard. They do the jobs Americans don't want to do. Frankly, I -- I think -- I mean, personally, that -- if they -- any illegal immigrant they catch in Arizona, they should let him keep doing his job because he's adding to the economy. For every one they catch, they should one Goldman Sachs guy to Mexico. That's -- that's how I would try...

KING: Will a...

MOORE: -- restructuring the law.

KING: Will an economic boycott -- and some people are trying it in San Francisco -- trying to economically boycott Arizona, like telling people not to go there. Boycotts can be effective, but they can also hurt the people they're trying to help.

MOORE: That's true. But I think -- I think there was a similar boycott on the Martin Luther King Day. And they eventually came to their senses. So, yes, those boycotts do work.

KING: Would you boycott Arizona?

MOORE: I have -- I...

KING: Well, would you -- would you...

MOORE: I have family in...

KING: Would you not stay in a hotel there?

MOORE: Yes, probably. Yes, I mean I have family...

KING: If you had a scheduled vacation there next week?

MOORE: I -- I wouldn't vacation there. But I -- I go to their film festivals. I have family there. My girlfriend from kindergarten lives there. Does that count?

I don't know. It's a wonderful state. There's great people there.

KING: Were you surprised that John McCain...

MOORE: I found that out on Facebook, by the way.

KING: Are you surprised at John McCain's change?

He was so in line with -- with Bush's kind of...

MOORE: Yes, well...

KING: -- progressive immigration status.

MOORE: I think that there is a general feeling of sadness about John McCain amongst all kinds of people. People used to think very highly of him, people who maybe disagreed with him, but respected him. And I -- you know, you always hate to see somebody in the final stage of their career do crazy things. I mean that -- that's...

KING: This was Tweeted to King's things.

MOORE: Yes.

KING: We -- we have people Tweet to us.

MOORE: OK. Yes.

KING: Ask Michael if he thinks the new Arizona law is the result of the federal government failing to reform immigration policy.

MOORE: No. I think it's the result of a bunch of bigots in the Republican Party of Arizona. That's -- that's what it's the result of. And it's sad that they're behaving that way and it makes the rest of us look bad as Americans. And they should start acting like Americans and not -- not do that. I guess that's the simple answer.

KING: Did you ever consider immigration as a documentary?

MOORE: You know, I've thought a lot about it, mainly because, Larry, we are always immigrants. We are all the children or grandchildren...

KING: We're fellow immigrants, right.

MOORE: Right?

We're all -- unless you're an African-American or a Native American, everybody else came essentially by choice as an immigrant. And we are the beneficiaries of what our forefathers and mothers did.

KING: Correct. MOORE: And we dishonor them -- we dishonor them by treating the new immigrants so poorly. We're a big country, Larry. There's lots of room for people. If you don't believe that, drive across Kansas some day.

KING: All right. You have often fought for protest as the American way -- for standing up for what you feel.

What do you think of the Tea Party?

MOORE: I think it's been given a lot more attention than it deserves. It's not really that big of a movement. It doesn't have that much support.

KING: But they're doing what Michael Moore would stand up for.

MOORE: Well, no, actually, they're not. I mean the irony of their, you know, populist movement against, you know, the bailout and the banks and all that -- here's my question. And if you -- anybody in the control room, if you have some tape, you can roll it. Show me one Tea Party demonstration that's taken place on Wall Street or in front of a local bank or any financial institution.

If -- if they're really so upset about that, why aren't they demonstrating there?

Instead, what they're doing, they're running around with placards of Obama with a Hitler mustache on him. It's a -- it's a nutty, nutty movement.

I -- here's what -- here's what I'd like to see. I'm going to check this out, too. On Thursday of this week, a bunch of unions across the country have called for a massive rally and march on Wall Street, on this Thursday afternoon. They're going to meet at City Hall Park and then they're going to march down to Wall Street. I'd like to see if that gets as much attention as the 600, 1,200 people Tea Party gatherings have received around the country.

KING: I didn't know this.

MOORE: Because...

KING: It's this Thursday?

MOORE: You see, you didn't know that. It's this Thursday. These are major U.S. unions that represent millions of American workers. They're going to be marching on Wall Street.

KING: What are they calling it?

MOORE: They're calling it Showdown on Wall Street.

KING: We'll ask Michael about Sarah Palin next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

KING: It was a night you never forget, June 1985. I had a feeling that night that this show would make it. When you get down to who, what, when, where, why, here I am. I'm there to ask questions. Do my best.

(END VIDEO CLIP)

KING: Twenty five years, who would have think it.

MOORE: Can I just say there was something on your website about what your favorite Larry King episode of the last 25 years. And my vote, seriously, is down with you and Marlon Brando. That was --

KING: You liked that kiss and everything?

MOORE: Well -- well, yes.

KING: We're showing it. Look at this.

MOORE: Here it is.

(BEGIN VIDEO CLIP)

MARLON BRANDO, ACTOR: It doesn't matter what he says.

KING: We're going to take phone calls.

BRANDO: Just leave it there.

KING: How does this look?

BRANDO: What? It looks like that.

KING: All right. What changed you? What diminished the anger?

BRANDO: Pain.

(END VIDEO CLIP)

KING: You can go to our website and vote for your favorite Larry King moment now, which Michael Moore was kind enough to vote already. Sarah Palin, why is she so polarizing?

MOORE: Well, first of all, I don't think there is anything wrong with her standing up for what she believes in. And a lot of people like what she believes in. Fortunately, the majority of the country doesn't like what she believes in.

KING: How do you explain the phenomenon?

MOORE: Because we're a big country. If you have 309 million people, there is a good possibility that there are a good 100 million that are going to want to shoot moose from a helicopter or whatever else that they think that's cool that she does.

KING: You think 100 million people want to shoot moose?

MOORE: I think they find that pretty hot that she is doing that.

KING: I think 100 million moose would like to shoot up to the helicopter.

MOORE: See, but being from Michigan, I've always advocated that when deer season comes, it would be a much fairer fight if we armed the deer.

MOORE: No, I've never spoken to him. Never had a direct contact -- is that the question? I've never had a direct -- a direct contact.

KING: Yeah, that's the question. Have you had an indirect contact?

MOORE: No. It's a long story that I'll save for my memoir.

KING: You were on this show the night before Obama signed the health care reform bill, a major night, a bill that had a lot of problems, but still you wanted it passed. What is your biggest concern about that bill now?

MOORE: My biggest concern is that there is no real enforcement powers that are in the bill itself.

And I -- actually, can I talk a little bit about this? About this contest that I had? I don't know if you heard? Yes.

Well, basically, if you have a copy of the -- if anybody has a copy of the health care bill.

KING: This was your contest, right?

MOORE: Yes. It was my contest. I announced it last week. Because nowhere in the bill does it say what the health insurance company's punishment is if they deny somebody with a preexisting condition. It's one thing to make a law saying OK, you can't deny anybody.

KING: There has to be a penalty.

MOORE: There has to be a penalty. So you read this whole bill. It's 2,000 pages long, as the Republicans are fond to point out. And there is nowhere in the 2,000 pages that it lists any actual penalty. But there is a penalty.

KING: You had a contest to find the penalty.

MOORE: Yes. It was secretly embedded in the bill. But because they didn't really want the American public to know.

KING: What is the penalty?

MOORE: If a health insurance company is found denying somebody because of a preexisting condition, their penalty is 100 dollars a day. So if they have somebody with cancer that needs a 100,000 dollar operation, they could just sit that cancer patient out for a full year if they live that long, and their fine would be 100 dollars a day, 36,000 dollars.

KING: You're sure of that?

MOORE: Not only that --

KING: We're going to take a break, come back. And as I understand it, you are going to call the winner?

MOORE: That's correct.

KING: We'll be right back with Michael Moore. Don't go away.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DONALD TRUMP, "THE APPRENTICE": I'm Donald Trump.

MELANIA TRUMP, "THE APPRENTICE": I'm Melania Trump.

D. TRUMP: Watch us on LARRY KING LIVE. You better watch it, or your fired!

(END VIDEO CLIP)

KING: That's tomorrow night. Right now, a historic moment in LARRY KING LIVE's 25-year history, another historic moment. We've had so many. And there will be many more. Michael Moore is about to call the winner of the "Find The Penalty" contest.

MOORE: That's correct. And another historic moment here. This is a contest that started last week on Keith Olbermann's show, but finishes here on LARRY KING.

KING: You have upgraded it.

MOORE: Yes.

KING: I love Keith. Go ahead.

MOORE: You guys are both great. So here is the deal. So I have this great crack team of researchers that work on my films. And this is how they decoded the health care bill. This is page 81 of the health care bill. And it says that the ban on preexisting conditions will be governed by title 42 of the U.S. Legal Code of the Public Health Service Act of 1944. OK. Then you flip to page 386 of the health care bill, and there is a bunch of gobbledygook that says it is amending 300 GG-22 of Title 42, which is Chapter 6-A, Subchapter 25, Part A, Subpart Four.

KING: Why are you putting our audience to sleep?

MOORE: No, but this is how they do it, because they know the average American would fall asleep by the time they get to this.

KING: How about to the point?

MOORE: Anyway, I asked America last week, tell me where this is, this 100 dollar fine. And Mr. Paul Harwood out in Portland, Oregon found it and we're going to call him right now.

So do you -- Larry, sing some Sinatra for us while were doing this.

KING: He is building up the tension.

MOORE: Three, five. There we go.

KING: And where does he live?

MOORE: Portland, Oregon. What time is it there?

KING: Our time here.

PAUL HARWOOD, OREGON RESIDENT: Hello, this is Paul.

MOORE: Paul, this is Michael Moore. You're live on the LARRY KING show.

KING: Why you laughing, Paul? That's not funny. It's a serious show.

MOORE: That was a laugh of joy.

HARWOOD: It was.

MOORE: You are the winner. You found the 100 dollar penalty.

HARWOOD: Well, thank you.

MOORE: And I just explained the first part of it. So tell them exactly after you --

KING: How did you find it?

MOORE: Where did you finally find it?

HARWOOD: Well, I am segregated from the television. So I didn't see your explanation. But what I found was that the 100 dollar fine is not actually in the health care reform bill. In fact, what the health care reform bill does is to modify some existing code, U.S. Code 42. And there is a very obscure amendment in the HCR bill. MOORE: I read all those subparts.

HARWOOD: OK. So it just -- I had to go look -- first, I had to find Code 42. And then I had to look in there to find where there were penalties like that.

KING: And the penalty is 100 dollars a day?

HARWOOD: That's correct.

MOORE: You can find it on page 1,170 of Title 42. But that's where you have to go from one bill to a bill from 1944, back to an amendment.

KING: Now, Mr. Generous, what does Paul win?

MOORE: What I offered was whoever found out where the penalty was, I would come and wash their car. And so they were to send me a photo of themselves, a picture of their car.

KING: There is the car. What kind of car is it, Paul?

HARWOOD: It's a pickup truck.

MOORE: What is it, a --

HARWOOD: It's a nice Ford F-150.

MOORE: That's a great truck, by the way. Not an endorsement.

KING: So you are a going to fly to Portland, Oregon.

MOORE: Well, the next -- it's more like the next time I'm in Portland, I'm going to go over to Paul's house.

KING: Fly out and do it the next time I'm in Portland.

MOORE: You think I should just get on the plane.

KING: Yes.

HARWOOD: Oh my goodness, no. Not this time of year. It's very cloudy and very rainy. Not a good time to be washing cars.

MOORE: I am going to come to Portland and wash your car for you. You are the winner of this contest, and you live in probably the coolest city in this country.

HARWOOD: Well, thank you.

KING: Congratulations, Paul.

HARWOOD: Thank you very much.

MOORE: Take care. KING: Paul, by the way, since finding that, has gone a little problem with his eyes and has need corrective lenses after looking for that.

MOORE: He is an engineer.

KING: Now, when we come back, Michael will have a new contest with a potential another winner, right after this.

(COMMERCIAL BREAK)

KING: We have a quick update on hospitalized rocker and reality TV star Bret Michaels, whose medical crisis we discussed last night. According to his manager, he suffered a minor setback in his recovery from a brain hemorrhage. Bret remains under 24-hour observation in ICU, but he is in positive spirits and we hope to get better news soon.

(NEWS BREAK)

KING: OK, Michael, you've got a new contest.

MOORE: Yes, the contest we're going to announce tonight on Twitter.

KING: On LARRY KING's show.

(CROSS TALK)

MOORE: Your handle is King's Things. OK. Mine is MMFlint, the town. I was watching Bill Maher a few weeks ago. He had on the former governor of New Mexico. I believe his name is Gary Johnson. And Gary -- they were talking about the health care bill. And Gary said something you hear a lot when we talk about health care and we talk about Canada, that bad system they've got up there, socialized medicine. And he said, you know, those Canadians, you know, they pay 40 percent in taxes up there.

And, you know, this was one of the many fallacies about Canada and their health care system. It just simply isn't true. Now we as American pay on average about 22.5 percent in federal income tax. So tonight's contest is to tell me and Larry, though either of our Twitter accounts, what is the average tax that a Canadian pays in federal income tax.

KING: A Canadian can win that in a minute.

MOORE: Canadians are disqualified? They're not allowed to play this game and we know who you are.

KING: What is the winner going to get? You will go wash his car?

MOORE: I think it's only right that you wash this winner's car.

KING: No, you. I don't wash cars. MOORE: How about two tickets to a Dodger's game?

KING: Two tickets to a Dodger's game.

MOORE: All right. There we go, two tickets to a Dodger's game the next time you're in L.A., or if you're in L.A., you'll have it. So MMFlint is my Twitter, King's Things. The first one that gets it right. I'll allow for -- it's different in various provinces. So give me -- British Columbia has the lowest and Quebec has the highest. So give me a range and we'll accept that as the answer.

KING: Quick thing, what about the automobile industry coming back? How about Ford?

MOORE: It's -- yes, profits you mean are coming back.

KING: Selling more cars.

MOORE: Any workers coming back? Have you heard that at all? No.

KING: Nobody's coming back?

MOORE: Yeah. Well, this talk about the recovering economy, it doesn't recover unless people are working. We have millions and millions --

KING: Wouldn't it be logical that more people buy cars, Ford will have --

MOORE: You would hope that that is what would happen. Has that happened? Because they have been doing better.

KING: How about housing prices ticking up. Aren't you encouraged by anything?

MOORE: I'm always encouraged to hear good news. We also -- look, Larry, my role is to give voice to those -- and there are still hundreds of thousands of people whose homes are being foreclosed upon. There needs to be a moratorium, the moratorium that was promised during the campaign of '08, so that people have a chance to catch up.

The Obama administration has done a number of things to help, but -- you know, for those who have done well in the past and are doing well now, things are a little bit better. But we can't leave all these people behind. A lot of people got thrown out on the curb during this recession, after this crash. And we've got to not forget them. They've got be brought back in. We have to find ways to create middle class jobs that give good wages, so they can raise a family.

KING: Will Toyota recover completely?

MOORE: Sure. Up until they became General Motors, when they became the number one car company, then they started acting like General Motors, with arrogance and trying to skirt the law and get around, spend a little less money to make a little more profit. They started acting like us. And they're suffering for it.

KING: Is there a major corporation you like?

MOORE: That's a good question. Where are we now? Time Warner.

KING: Time Warner.

MOORE: My first movie, "Roger and Me," Warner Brothers.

KING: OK. Our time 25 countdown pick of the day is next.

(COMMERCIAL BREAK)

KING: This year, we're celebrating the 25th anniversary of LARRY KING LIVE, We have another of our interactive LKL top 25 moments. You'll be seeing a lot of these in the coming weeks. Tonight's moment is one all of us here at LARRY KING LIVE are very proud of. We got to help a lot of people.

(BEGIN VIDEOTAPE)

KING: Tragedy is riveting, but, at the same time, tough. So you're on a high because you know there's a momentous thing going on. At the same time, you wish it wasn't going on. It's conflicted feelings.

Welcome to Haiti, How you can help. Mick Jagger, Jennifer Lopez, Ringo Starr, Seal, Ben Stiller and many others are here to say thank you.

It was a great moment, great idea, producers came up with it, raised 10 million dollars.

COLIN POWELL, FMR. SECRETARY OF STATE: The challenge is going to be great.

KOBE BRYANT, NBA BASKETBALL PLAYER: It's important for all of us to contribute.

KING: One of the great things you can do is a show like that. Nothing else can do that. Twitter can't do that. The Internet can't do it. World-wide television satellites can do that. All the celebrities worked. They were happy to be there. It was a giant night for them.

Keep phoning in, keep phoning in.

Fifty three years in the business and counting, still love going on. That was special.

(END VIDEO CLIP)

MOORE: By the way, go to CNN.com/LarryKing. Pick your top moments. We'll reveal the top five beginning May 31st. You might win a trip to Los Angeles to meet me. You'll see the show in person. We'll take you to dinner, too. That's LARRY KING LIVE 25 years.

You do an imitation of me?

MOORE: I won't do it. I won't embarrass you or mostly myself by doing it here.

KING: OK.

MOORE: Tonight, on Larry king live, the king of controversy!

KING: OK. Do you think the republicans might take congress this year?

MOORE: No. No. If the Democrats stay on the path that they've been on the last few weeks, finally, after a year or so, of pushing for the things that they were sent to Washington to do, then they will hold on to Congress this November. If they back away, if they don't go for the fight, if they don't make the Republicans filibuster -- make them read from the phone book for 20 days to hold up this Wall Street reform bill. Let the American people see what the Republican party is really all about. That will do more to tell the American people who needs to hold on to both of these houses of Congress.

If they don't do that, if they try to act like Republicans themselves, well then people aren't stupid. When they go in the voting booth, they're going to vote for the real thing, not the fake Republican.

KING: What's the next Michael Moore film?

MOORE: That's a good question. I don't know. Do you have any ideas?

KING: Well, immigration is certainly an idea.

MOORE: Yeah. I don't know. Something that's a comedy. I need to make something called "Mike's Happy Film," you know, where it's like nothing but solutions, no problems.

KING: I have an idea.

MOORE: Yeah.

KING: The shortest film you've ever made, things I like.

MOORE: Things I like. No, I like a lot of things. I already gave an endorsement to the Ford F-150.

KING: You did. Let me get a call in for you. Minneapolis, hello. Are you there? Is Minneapolis there?

CALLER: Hello.

KING: Go ahead. What's your question?

CALLER: I'm curious if Michael Moore could think of a government system that would be between democratic and socialist, what would that be?

KING: A balance of both would work, capitalism and socialism. We have less than a minute. What would work? We have that in a sense. We have Social Security.

MOORE: We have it to a limited degree. But European countries have a system that's more like that, where there's a much better social safety net, where they don't have so many people -- we have 40 million Americans who are functional illiterates. We have a high poverty rate. We a violent crime rate they don't have.

The reason for that is when you create an economy where the pie is divided a bit more evenly, where everybody has a slice of that pie -- funny thing is, Larry, when somebody has a middle class job and they make 50,000 60,000 dollars a year, they don't break into your house and steal your TV set. Isn't that weird how that works?

Full employment and we would have a better country. We're out of time. Thank you for coming here tonight.